Billionaire Apple CEO Tim Cook was denied a credit card carrying the iPhone maker’s logo because of a snafu in the company’s troubled joint venture with Wall Street giant Goldman Sachs, according to a report.
The snafu surfaced because high-profile figures such as Cook are frequently targeted by fraudsters seeking to impersonate them, The Information reported
The red flags from credit bureaus led Goldman’s underwriting system to reject Cook, sources told The Information.
Cook, whose company this month became the first to reach a $3 trillion valuation, eventually managed to score the sleek card after Goldman overrode the denial, according to the news site.
The partnership between Goldman and Apple has been beset by problems since Apple Card was launched in October 2019.
Goldman is reportedly looking to get out of the partnership due to lower-than-expected profitability in the short term, The Information reported, citing people close to the matter.
When Apple and Goldman initially partnered up, interest rates were low and macroeconomic forecasts were much rosier.
At the time the deal was forged, Goldman agreed to forgo collecting credit card fees such as the interchange fee that merchants pay to accept Apple Card, according to The Information.
The loss of revenue has made it harder for Goldman to cover increasingly high costs, according to the report.
The Wall Street investment banking giant has reportedly tried to offload its Apple ties to American Express.
Apple, however, has the power to veto any attempt by Goldman to exit the venture, sources told The Information.
A deal involving American Express is unlikely given that Apple’s credit card processes payments through Mastercard’s network.
Goldman blamed the Apple Card for at least $1 billion in pre-tax losses, according to Bloomberg News.
The two companies also developed a friction over several issues, including the design of the card.
According to The Information, Goldman wanted the cards to be branded with the logo of Marcus, the failed consumer banking division that was recently folded into the company’s asset and wealth management unit.
Ultimately, the Apple logo was the only one seen on the front of the card while the insignias of Goldman Sachs and Mastercard were on the back.
In March, Apple launched its “buy now, pay later” service in the US.
The service is enabled through the Mastercard Installments program, with Goldman Sachs as the issuer of the Mastercard payment credential.
Apple credit card, which is made out of titanium and no visible number, currently offers 3% daily cash back to spend or save, Apple’s website said.
It also offers interest-free monthly installments on purchases of Apple devices.
Earlier this year, Apple launched a high-yield savings account with an APY of 4.15% in partnership with Goldman Sachs.
But account holders complained that they were struggling to move their money.
The account was offered exclusively to holders of the Apple Card.
The Post has sought comment from Apple, Goldman Sachs, and American Express.
Source by [New York Post]